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Non-major sees housing loan growth rise 14%

by Reporter5 minute read

Australia’s fifth largest bank has revealed that, for the six months ending December 2016, it saw housing loan growth rise by 13.9 per cent, largely due to “strong growth” across retail and broker channels.

Bendigo and Adelaide Bank’s 2017 interim results show that housing loan growth was 2.1 times system growth, and saw $11.7 billion of new loan approvals, of which $8.7 billion were for residential loans.

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In total, the residential portfolio balance was just under $38 billion as at December 2016.

The bank said that there was “strong growth” across the retail and broker channel, with housing lending growth from the third party up 5.8 per cent, while retail was up 4.4 per cent (annualised figures for June 2016 to Dec 2016).

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By distribution channel, retail accounted for just over $20 billion of the residential portfolio (65 per cent owner-occupied and 35 per cent investor), mortgage managers accounted for around $15 billion (60 per cent owner-occupied and 40 per cent residential investment) while ‘broker direct’ was responsible for around $3 billion (63 per cent owner-occupied and 37 per cent investment).

Speaking at the investor presentation, chief financial officer Richard Fennell said: “Turning to the mortgage side of the business and housing lending, it’s still very competitive out there and although we’re probably seeing some slight easing at the very sharp end of front book discounting, the reality is there are still significant discounts being offered for good lending and the front-book/back-book pricing differential will continue to be a challenge for all industry participants.”

Mr Fennell added: “One of the highlights of the last six months, following the work we’ve been doing in the mortgage manager space, has been [seeing] that return to growth for our organisation as we’ve gone through a restructure of that part of the business.”

Overall, the bank announced an after-tax statutory profit of $209 million for the six months ending 31 December 2016.

Underlying cash earnings were $224.7 million, a 0.4 percent increase on the prior corresponding period and up 4.2 per cent on the previous half year.

Cash earnings per share were 48 cents, a 0.9 cent decrease on the prior corresponding period.

The final fully franked dividend of 34 cents per share is flat on the prior half year period. A 2.5 per cent discount for shares issued under both the Dividend Reinvestment Plan and Bonus Share Scheme has been announced.

Managing director Mike Hirst commented: "Our desire to provide our customers with the best overall experience in financial services led to strong lending growth across retail and partner channels, which has resulted in the bank delivering growth above system, despite competition remaining intense.

Pressure on net interest margin, following the May and August cash rate reductions and holding additional liquidity for the Keystart portfolio acquisition, resulted in a six basis-point contraction over the half. However, as the market repriced loans in August and December in response to increased funding costs, our margin recovered, resulting in an exit margin of 2.14 percent.”

[Related: Non-major sells estates business to trustee company]

Non-major sees housing loan growth rise 14%
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